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it finally happened Dr Michael Berry talked a little bit about valuation in China for those of you who don't know where big Michael Berry fans here and we're big Alibaba shareholders so we finally have an intersection of two things we actually care about we're gonna talk about it and see what our take is right now it's turning point in time yeah I'm stoked if you uh like this kind of entertaining Sacramento content whereas two super guys and let's get started hmm two stupid guys three stops all right so did the man himself basically say buy China buy Alibaba at this point in time that's the question we're going to talk about what do you think it says buy China and pink so yeah I would say literally official definitely allows color like font no this is the actual tweet that he that he put out um you know China's markets are having America in early 2009 moment I mean if you've been anywhere on like YouTube you've been bombarded with China like you know economic issues the whole day's crashing in 22 days by the way he changed that thumbnail because he has no spine uh talking about how just the fact that there's so many negative news headlines surrounding this that you have to be at this utter pit of despair in terms of valuation and I'm going to show you the numbers briefly you know even when we're looking at not such a great year for Alibaba where do they put into value from like a free cash flow basis that is quite the tweet and just to remember everyone ending of 2009 we were not great we were incredibly low and then we had us all in two or three years right after that I mean two three years couple decades well decade plus I'll show you what the graph actually looks like from that standpoint it's in this presentation so this is a screenshot of Casper's Academy this this is this is his videos like just like red and furry and China and like everything's pessimistic like China doesn't even exist anymore it's just like falling off the cliff according to him um so this is the actual video here 300 billion just disappeared that's the one where he originally said like China's gonna crash in 28 days yeah got 3.2 million views on that video all right utter insanity and then of course he never mentions where he came up with this 32 days or whatever it was in the video and then nothing happened yes I just this this is why we're never gonna have more than like 10 000 Subs is because uh we won't do this this is so annoying I've clicked on a couple of his videos they're crap you it's a 15 minute video where you learn one fact and the fact is not cited so who cares and if you go back far enough you know he's talking about how great an investor Kathy Wood is and how Huckleberry is wrong oh yeah whatever the flavor of the week is okay yeah there you go Kathy Woods this sector is about to 50x four months ago killed it this this sentiment is not entirely just his though okay that this is a pretty wide sentiment amongst like you know kind of Talking Heads and you know media entrepreneurs or whatever you want to call them these days um you know this is uh largely overblown statement you hear it all the time you know what is this fear versus greed thing about you know being greedy when others are fearful and being you know fearful when others are greedy this is exactly what that embodies to me you make calculated decisions based upon your own risk tolerance and you you invest based upon that you try not to have any influence from outside world the outside world right now is super pessimistic uh regarding Chinese economy so it definitely represents the fear aspect of this the question is you know how appropriate is to be greedy right now that's what I kind of come back to um I think one more drop like one more negative news cycle of China and like before the end of the year then after that I think it should be awesome who knows honestly you know but are they truly going to go away overnight no this is the second largest economy in the world no and he's talking about valuations approaching 2009 America levels this is a graphic SP 500 when you look at 2009 compared to where they are you know 15 years later ridiculous right yeah you saw a profound growth over the next several you know or next decade plus right yeah that that's what your opportunities are when you invest at like the absolute nitus of of you know depression in terms of stock prices and valuation and you know kind of optimism regarding these these Financial assets don't be wrong like it's nothing certain you know like I'm not about to go like wholesale into this I still have a little position in Alibaba um but it's not my largest holding by any means um yeah but no mine's not my largest holding either yeah oh it is oh boy uh so you've had some positive kind of news uh stories come out a little bit but they don't get quite the same traction right we're talking about the the delisting risk and now your positive development in terms of assuaging that fear where you have the US and China now cooperating on this pcaob accounting oversight board auditing of the Auditors um I know right audit of the audit is all the auditing all out of theirs gotta have uh you know checks and balances right yeah it's like Inception of financial auditing you know uh but that's the basic idea here is that you actually have uh folks from this this public accounting oversight board on the ground looking at actual auditing you know kind of documents from these companies now right um even more so this is a story from a couple days ago where now you know you could take this one of two ways that China was also sending some Regulators to Hong Kong to assist the US audit inspections they may be assisting versus getting in the way who knows how to actually get it yeah I know right but the point is that you have the people in the room together that are actually trying to you know make this happen and uh assuage the fears of delisting risk in terms of Alibaba stock and all these other Chinese like equities so that's positive news and you know I don't think that people are weighing the possibility of this actually happening there's very much a show me attitude which is fine but my point is that you just can't completely ignore that when you're talking about uh you know finding companies with tremendous Financial kind of metrics here so this is where Baba stood as of today this is we're recording this on September 24th 2022.
210 billion dollar market cap 6 5 billion dollars in cash and short-term Investments right and they're you know they've had a rough year right the Chinese economy has had some certain successes headwinds with zero code policy I'm not gonna lie uh obviously that's very much there are real aspects of this that are negative for Alibaba um however they still have managed 12.5 billion dollars in trailing 12 months free cash flow meaning that trillion 12 months looking at an 8.6 free cash flow yield yeah that's fantastic contains all right yeah exactly the projections going forward are better you know so like this is this is a tremendous cash on cash return that's why it's like I'm not worried about it you know I I will continue holding this and I legitimately have a multi-year outlook on this sort of stuff because at some point that cash flow will catch up you still have them having 15 billion dollars in authorized like you know share repurchase program as of now you know that's a hell of a Canon they have to fire at it particularly when the stock price is just depressed that although I am not directly contributing more dollars to this they are generating dollars every day which they can use to repurchase shares you know that's a tremendous kind of uh upward pressure over the long run on valuations so I'm okay with waiting let me ask you two questions is there a price where Baba hits that you would buy more we're at 84 something yeah it's I think it's more about risk tolerance um right now I have enough Alibaba I'm okay with it I don't want to buy any more at this particular point in time there are other companies from a diversification standpoint that I am actively buying on buying Google and meta right now too those are companies that I'm interested in the first thing we're buying masses into um but I I am happy with my position I'm happy to hold it and I will not um you know I don't think anything it deserves the valuation that are currently at basically is my point and that this is truly when you're at a depressed level in terms of new cycle fear and these are the great out buying opportunities in the long run so the two biggest risks of this are China company and then everyone would bring up Diddy or the Uber whatever it is and it's trash or the luck and coffee thing right or value trap Intel yep Intel has been at the same price for a million years okay yeah one million years yeah okay exactly it's the first business of humans still the same price um would you ever consider buying JD the other rival company that's a little bit smaller but is still tremendous Financial reports true I honestly I haven't done enough due diligence on JD to give you an uh accurate assessment of them from what I've been kind of through my Alibaba ownership you know I've gone and garnered about them in terms of uh market share kind of capture and how they're growing in terms of that I I do think there are some very positive things there however I still would rather own like the 300 pound gorilla in the room you know to me that that's what was my standpoint on why I picked mava in particular fair but JD has a drone airport all right guys that is cool I'll catch you the next one later guys
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